05/24/2017 - Charles Hugh Smith On The Ongoing Permanent Keynesian Stimulus To The Economy – The Failure Of The Keynesian Coloring-Book Plan
“What do we call a status quo in which ’emergency measures’ have become permanent props? A failure. The ’emergency’ responses to the Global Financial Meltdown of 2008-09 are, eight years on, permanent fixtures. Everyone knows what would happen if the deficit spending, money-printing, zero interest rates, shadow banking, asset purchases by central banks and all the rest of the Keynesian Cult’s program stopped: the status quo falls apart .. Nothing has worked as the Keynesians expected. Instead, state/central bank measures that were supposed to be temporary are now permanent, and the expansion of private-sector debt has failed to ‘trickle down’ to earnings .. The Keynesian solution—borrowing from future earnings to ‘bring consumption forward’—has expanded consumption at the cost of enormous increases in debt throughout the economy, which has exacerbated income-wealth inequality and declining real incomes .. Can we finally admit that eight years of following the Keynesian coloring-book plan have not just failed, but failed spectacularly, and not just failed spectacularly, but made the economy even more vulnerable and fragile, as more and more future income must be devoted to service the skyrocketing debts? .. Isn’t it obvious that there are deeply structural problems in the economy that inflating yet another credit/asset bubble won’t fix? .. Clearly, the real-world economy does not function like the simplistic Keynesian coloring-book model.”
